Canara Bank Ltd (NSE: CANBK) Q3 2025 Earnings Call dated Jan. 27, 2025
Corporate Participants:
K. Satyanarayana Raju — Managing Director and Chief Executive Officer
Uday Sankar Majumder — Chief Risk Officer
S K Majumdar — Chief Financial Officer
Analysts:
Mahrukh Adajania — Analyst
Unidentified Participant
Jay Mundra — Analyst
Ashok Ajmera — Analyst
Jugal — Analyst
Suraj Das — Analyst
Rakesh Kumar — Analyst
Sushil Choksey — Analyst
Arvind Dara — Analyst
Akhilesh — Analyst
Presentation:
Operator
Good evening, everyone. We welcome you to the Q3 FY25 Earnings Webcall of Canara Bank. Thank you for giving us this opportunity to [Technical Issues]. Here with us [Technical Issues] Satyanarayana Raju, MD, sir. We have with us Mr. Ashok Chandra, Executive Director;
K. Satyanarayana Raju — Managing Director and Chief Executive Officer
No. Ashok Chandra is not there. Mr. Ashok Chandra is not there. He has gone already to PNB as MD.
Operator
Sorry, sir. Mr. Hardeep Singh Ahluwalia, Executive Director; and Mr. Bhavendra Kumar, Executive Director, along with other senior management team out here. Without any further delay, I hand over the call to MD sir, post which we’ll open the floor for question and answer. Over to you, sir.
K. Satyanarayana Raju — Managing Director and Chief Executive Officer
Good afternoon to all of you sir. So, another consistent performance figures I would like to share with you as on the December Quarter performance. Our global business has grown at 9.3%, stood at 24.19 lakh crore. Our global deposits have grown at 8.44%, stood at 13.69 lakh crore. Our global advances have grown at 10.45% as against — and stood at 10.49 lakh crores.
Our operating profit, again, regained and it is reflected more than 15.15% year-on-year growth, stood at 7,837 crores. Our net profit grew at 12.25% year-on-year and stood at 4,104 crores. Our PCR has reached all-time high of 91.26% with year-on-year improvement of 225
Basis points. Our Gross NPA has come down to 3.34%, year-on-year decline is 105 basis points. Our net NPA has reached to the all-time low in the history of Canara Bank to 0.89%, with year-on-year decline of 43 basis points.
When we have grown the advances more than 10%, what we have given the guidance double digit at 10.45%, it was led by the RAM credit at 12.32%, and our Corporate has grown at 8.08%. This RAM credit as led by again retail credit with 35.46%, mainly on the housing loan grown at 12.26% and vehicle loan grown at 17.26%. Our earning per share stood at 17.59. This is against Rs. 2 face value. And our fee-based income showed a steady growth with year-on-year 23.31% and stood at 2,185 crores.
Our slippage ratio first time it has come down below 1%. We are able to maintain that below 1%, and the year-on-year reduction is 28 basis points, we stood at 0.96%. Our credit cost again all-time low in the history of the Canara Bank to reach to a 0.89% at 8 basis points.
See, at the initial stages when we commenced out the financial year, while announcing the last March — last financial year results, we have given a guidance in 13 parameters to the investors. The same 13 out of 13 for March, whatever we have given the guidance, out of the 13, 9 parameters already we surpassed or we have achieved whatever the guidance we have given it to achieve by the end of the March.
We achieved well within that three months earlier only. Within nine months itself we could achieve that nine parameters. These nine parameters are advances growth, then the Gross NPA, Net NPA, PCR, slippage ratio, credit cost, return on equity, earning per share, return on average assets. These are all comfortably we surpassed that March, whatever the given guidance.
In four parameters business growth and the deposit growth and CASA and NIM. I want to share it with you that though the growth is steady, but still here we are facing a constraint that the market liquidity is still having a problem. We can garner the term deposits, it is not a big issue for the bank, it’s not a concern for the bank, but only thing, at what rate we have to raise that. Since in the market the rate of interest war is going on, it has become a costly affair. That is why last quarter when we have an 8% of excess SLR, instead of garnering the high-cost term deposits, we depended on a window available with the RBI by pledging our excess SLR and raised it around INR40,000 crores, INR45,000 crores.
And that we could raise it around only 6.5%. That is helping us in reflecting a better performance in the bottom line. That is the reason actually we have shown a growth of 8.4% in the deposit. That has indirectly impacted our guidance of 10% business growth to 9.3%. But we want to continue, because again, we have kept in mind that the LCR guidelines, whatever the regulatory guidelines which is going to come effective from 1st April onwards, that may impact our LCR to 12 to13 basis points.
At this moment, our LCR is 123% as against the regulatory requirement of 100% and within the bank requirement of 105%, we are at 123%. But if you impact that as on date, that guidelines are implemented as on today itself, our LCR would have fallen from 123% to 110% or 111%. Just to bring it back to 120%, in the December — first week of the December Quarter, we introduced a two long term tenure term deposits and offered a higher rate of interest that is two to three years and three to five years’ buckets, and we offered at a 7.3 and 7.4 for general public. That has attracted quite a handsome of amount.
We almost garnered INR8,800 crores so far in the last one month, and we will continue to do that, so that will take care of our shortfall of LCR. Whatever the guidelines we are going to impact our LCR, that 10 basis points again we want to regain by canvassing the deposits under these two buckets. That has impacted our cost on deposits a little bit. That is also has impacted our NIM to some extent. So, these are all the few glimpse of that performance I have shared with you. Now, open for all of you sir, you can ask any clarifications. We are there to answer you.
Questions and Answers:
Operator
Thank you, MD sir. We will wait for a couple of minutes for the question queue to arrange. [Operator Instructions] We have our first question from the line of Ms. Mahrukh. Please go ahead, ma’am.
Mahrukh Adajania
Yeah, good evening, sir.
K. Satyanarayana Raju
Good evening, madam.
Mahrukh Adajania
Yeah, hi. Sir, just a couple of questions. Firstly, that just in terms of deposit growth, how do you plan to boost your CASA? Because it’s already down to 30, right? I know there’s a lot of competition. Traditionally also your CASA was very competitive given your — given that your geographical presence kind of matched that low CASA. But now at these levels, how do you boost CASA? And what is the tolerable level of LDR? As in — as of now, the domestic LDR is already 78. So can you take it up to, 80, 81? What is your comfort level of LDR? That’s my first question. And I have two others.
K. Satyanarayana Raju
Okay madam, first question. First, let me answer about that CASA what we are doing it. We have recognized our shortfall of the CASA. That’s why the last two years, we have come out with so many new products targeting various sections of the people. But all those products have been deeply penetrated and it has attracted almost 23 lakh new customers in those new products. It has contributed to us almost INR17,200 crores incremental CASA deposits, savings deposits alone.
But what the unfortunate part is, at this moment, when we have introduced, at that time itself, the market liquidity has become a major issue and the market has gone beyond expectations. And simultaneously, industry started offering very high rate of interest. And you are aware, that now presently in all public and private sector banks, the payment platforms have been stabilized. Every individual can shift his
Surplus funds anytime to either the term deposits or to the mutual funds, or whenever he wants he can redeem it and bring it back to his savings bank account.
Under such matured payment systems, the customers nowadays, the tendency became that they are not retaining beyond whatever is the basic requirement of the CASA amount in the savings bank. Remaining entire surplus, they are shifting to the term deposits or even for the other income avenue sources. That is a major concern.
But our thrust will continue in the CASA. Because recently also, just one month back, we have introduced in the current month only, we introduced a Canara Crest, that is to reconnect with our existing high-net-worth individuals. This is also an innovative product Canara
Crest and Canara Crest Plus. This is targeting our existing customers who are maintaining a well average balance, daily average balance, good handsome average balance.
We are making them as a customer of the bank instead of a customer of a branch. We are making all 10,000 branches as a home branch for them. Anywhere if they visit, they get a same treatment in all the 10,000 branches, and we made the Branch Manager as a Relationship Manager for such high-net-worth individuals. We are meeting them, we are extending this facility and the initial response is very, very high. So that whatever the steps we are taking in augmenting the fresh deposits, this initiative of retaining the existing customer and their balances, will help in growing little bit in the coming two months or three months. But definitely it is a challenge to
Grow in that. That is why our innovation of products targeting the sections will continue here afterwards also.
And the second one is, you asked about…
Mahrukh Adajania
LDR.
K. Satyanarayana Raju
CD ratio. CD ratio, madam. We are already at 76.65%. We may reach at — we are comfortable at 78% because the 18% is SLR, 4% is CRR. Together it is a 22%. If you remove these two things, the 78% is comfortable for us; that is our comfort level. Till that time, we will
Continue to grow in that. The 78% for us, psychologically is a limit we can absorb. That is our global CD ratio
Mahrukh Adajania
Got it, sir. Got it. Okay, sir. Sir, and my other question is, is there any one-off in interest income because other interest seems to have gone down this quarter? And likewise, in your fee-based income where you have three components, commission, service charge and miscellaneous, you have three in — so the miscellaneous is a very big amount. It’s bigger than the commission exchange and brokerage. And this quarter it has fallen Q-o-Q. So can you break it down into components or explain why the miscellaneous fell so much. And likewise, if there is any one-off in interest — earned interest income. And also in the provisions, there is an NPA — sorry, an investment provision, NPA investment provision, right, of INR4 billion, what is that for? Non-performing investment?
K. Satyanarayana Raju
Yeah. The first question.
Mahrukh Adajania
First question is one-off in interest income [Speech Overlap]
K. Satyanarayana Raju
That’s — let me answer you, Madam. First of all, the one-off, the interest income. Actually, the interest income, if you look at the Q-on-Q or year-on-year basis, interest on loans and advances is a considerable improvement is there because our average advances are growing steadily. But the only thing the last year, whatever the last year and this year, we used to get a benefit of excess liquidity whatever available in our system, we used to lend in the — effectively in the one overnight market or call money market, that benefit we are taking it and that is actually other interest income.
But this time since we are using our excess liquidity in increasing the credit growth, we are not lending more in that overnight investments. There we have seen some reduction in that — the other interest income. The one-time interest is last quarter, we got some INR320 crores benefit in the NPA account. One NPA account when we are resolving it, we got a recovery towards the interest on NPA is INR320 crores. That INR320 crores one-time is not available this time.
Even with these two conditions, still we could recoup because of our improvement in the interest on loans and advances. That is — that’s why if you see that sequentially only INR200 crores shortfall is there in the interest income. But it is a bottom-line with its base. Here outwards, we strongly believe that quarter-on-quarter there will be a steady growth in NII. Then second, it comes for the fee income. Fee income has grown at 23.31%. Madam this fee income, it is one is commission, exchange brokerage, whatever it is there.
It’s a steady growth only. It is there. It’s not that too much growth, whatever it is there, but we are focused on non-fund-based business mostly that earlier it was stagnant, but because now centralized — we have centralized that non-fund-based business entire thing that as the initial stage stabilization, it took some time, but now it has started giving the results. Again, it is also — we also started the cash — collection centers, cash management and collection centers, that is also giving some good income that has helped in giving that some INR100 crore we got in that fee-based income.
Earlier last year this vertical was not there, but this vertical is created in the second half of the last year that has contributed a good income. Regarding the miscellaneous income, it is miscellaneous income, it’s only debit card charges, and that you have to see that miscellaneous income you cannot see from — okay sequentially quarter-on-quarter. It has to be looked at year-on-year wise. Because many of the incomes, in the four quarters, some incomes fall in one-time measure of either September quarter or December quarter or March Quarter. Let us say that CGTMSE fee collection. That will fall in September quarter. That is why in September quarter that it looks that more it is there and there is a fall in that. When you have to compare, it cannot be compared sequentially, you have to compare only year-on-year basis.
If you see the year-on-year basis, INR570 crores became INR747 crores with a 31% growth. There, I feel that it is in line with the as-expected only. Then again treasury income also we got some improvement in the treasury income. That is because as per the latest regulated guidelines, every bank can sell their 5% of held-to-maturity (HTM) securities. First two quarters we have not sold any securities
Because we want to keep it as we have sufficient incomes.
Since we are getting some benefit from the market, we have immediately taken some call. Part of that 5% we sold in this quarter and the remaining part we kept it for the next quarter, the current quarter. That benefit also we got some around 300 crores. That has shown
Some increase in the treasury income.
Now regarding NPI, madam when we are resolution — with true resolution, when we send that when we transfer our account from banks to NARCL, there we are getting 15% only get down cash payment, the remaining 85% we get SRs. That SRs will be accounted in the investments. But only thing, even though it is a Central Government guaranteed accounts, we cannot reverse that provisioning. So, it is nothing but increasing the provisioning in NPI, but to that extent, decreasing the provisioning in the NPA. If you look at that overall, the provisioning is almost same as last quarter. Except that, there is no fresh investment is slipped to NPI.
Hope I’ve answered all your questions.
Mahrukh Adajania
Yes, sir. Sir, only on that miscellaneous income, it is only debit card [Speech Overlap]
Operator
Sorry, ma’am, we have a lot of participants waiting in the queue. If you could please rejoin the queue.
Mahrukh Adajania
Sure.
Operator
We have our next question from the line of [Indecipherable]. Yes, sir, please go ahead.
Unidentified Participant
Hello. Am I audible?
Operator
Yes, sir.
K. Satyanarayana Raju
Yes, sir, audible.
Unidentified Participant
Hi, sir. Congrats on the quarter and thanks for taking my question. Sir, firstly, you are one of the largest players in agri gold loans. And right now RBI has been talking about some changes in that segment in terms of they have to be collateral free, they have increased the limit from 1.6 lakhs to 2 lakhs. Just any thoughts on how this product evolves? Because I presume everything is collateralized and if RBI wants it to be collateral free for PSL benefit, how will this business evolve?
K. Satyanarayana Raju
Sir, our internal audit by the RBI is concluded and I have not seen any such comment from that RBI regarding our gold loan in the agriculture. So, I don’t see any problem at this moment from any regulatory comments on that.
Unidentified Participant
So this full INR1.5 lakh crore book comes under PSL, gets a PSL benefit?
K. Satyanarayana Raju
No, sir. No, no. So INR38,000 crores is a retail portfolio. The remaining amount is under agriculture.
Unidentified Participant
So that remaining gets PSL, INR1.1 lakh crores.
K. Satyanarayana Raju
Yes, sir.
Unidentified Participant
Okay. So there is no issue on that front with RBI.
K. Satyanarayana Raju
So because the current year audit, the RBI exit meeting also is over. There is — we have not seen any comment that related to that particular area. So that’s why we cannot comment on that.
Unidentified Participant
Okay. And just in general on the retail portfolio, RBI has been concerned about certain practices. You can’t revolve without paying the full thing. They are concerned about bullet loans in gold loans. Any changes to the underwriting we are doing? And also the 75% LTV, is it only a disbursement or throughout the term of the loan?
K. Satyanarayana Raju
So the LTV is throughout the loan. There is no question of at the time of just disbursement because the expectation is that whenever the rate of interest is charged, as and when charged, it has to be serviced. The regarding the retail loans, we don’t have any bullet payment type of products at all, it is — they are all equated monthly installments only. And wherever it is there, if it is a bullet payment, the interest as and when serviced, the charge has to be serviced by the borrowers.
Without that there is no such product is available in Canara Bank. Regarding the regulatory concerns, it is only unsecured loans that unsecured loans is not so active in our bank because we have only against the salaries and pension, it is a INR15,500 crores as on date. So that is very small amount compared to our total INR205,000 crores to INR206,000 crores retail product. It’s hardly not even 6% or 7%. And in that NPA is also less than 1%. We don’t give any clean loans other than the salaried class and pensioners who draw their salary or pension through our bank.
We don’t give any pre-approved loans. We don’t give non-salaried class clean loans and all. So that concern is not there. Again, another concern by the regulatory is the MFI exposure. Our MFI exposure, we reduced it even from one year back, it was around above INR700 crores. Now it has come down to INR300 crores. And we have kept about unless the maximum cap is only INR40 crores for MFI and we are not so aggressive on the lending to the MFI.
Unidentified Participant
Okay, sir. This was very useful. Sir, secondly, to the previous question, you mentioned INR320 crores interest benefit. So can you just repeat? I think last year which [Speech Overlap]
K. Satyanarayana Raju
Let me say that. Sir, last quarter our interest on NPA recovery is INR780 crores. That’s interest on NPA accounts for that quarter. But generally on an average, we get every quarter, it’s say INR400 crores to INR450 crores. But last quarter because one account resolution, we got INR320 crores towards the interest, we have taken that benefit in the interest income. But otherwise, the average income — average interest on NPA, every quarter we receive on INR450 crores to INR500 crores. This time also we got around INR530 crores.
Unidentified Participant
And sir, that comes in other interest income line item, right?
K. Satyanarayana Raju
Yes, sir.
Unidentified Participant
Okay.
K. Satyanarayana Raju
Other interest income [Foreign Speech] sir. Other interest income [Foreign Speech] it is in [Speech Overlap] advances, but other interest income is whatever your overnight lending. You do it whatever the excess liquidity it is there, whatever the excess liquidity you have, you will do that in the — you deploy in the overnight or short-term investments, that income. That income has come down a little bit.
Unidentified Participant
Understood. Sir, just last year, it may be a little early, but what is your deposit growth?
Operator
We have a lot of other participants waiting in queue.
Unidentified Participant
Okay. Sure. Sure, sure. Thank you so much, sir and wish you all the very best.
K. Satyanarayana Raju
Thank you very much.
Operator
We have the next question from the line of Mr. Jay Mundra. Sir, please go ahead.
Jay Mundra
Hello. Yeah. Hello, sir. Good evening.
K. Satyanarayana Raju
Good evening, Jay, sir.
Jay Mundra
Sir, I have few questions, sir. Thanks for the opportunity. One is, sir, apart from this interest reversal, the interest on NPA that was lower by INR300 crores, was there any other reason that why the loan yields would have declined in this quarter, any other product where you are seeing maybe there is a pressure on yield?
K. Satyanarayana Raju
Sir, if you look at that our yield, say it is quarter-on-quarter if you see that earlier the September quarter, our yield is 8.77. Now it is 8.79%. There is a 2 basis-point increase in the yield. So literally no product we are compromising in the rate of interest and we are not reducing any rate of interest. Even let me share it with you that one year back, our corporate portfolio of INR4 lakh crore used to give at 7.1 to 7.20, that’s the yield — average yield. But now we are successfully by re-emerging, re-jigging that the exposures and all. Now we are almost touching 8.5% in the corporate[phonetic] yield. So yield-wise, we don’t have any concern. We already are in the highest level, but the only our concern is the only cost of deposit.
Jay Mundra
Understood. Secondly, sir, if you can provide the breakup of slippages for this quarter and outstanding restructured — standard restructured book?
K. Satyanarayana Raju
Sir, total — actually the slippages are INR800 crores agriculture. INR500 crores is retail near to the INR1,000 crore is MSME. This is a INR2,300 crores, sir. No corporate account slipped to NPA. Now the outstanding restructuring RF1, RF2 and MSME restructuring. Total now as on date, standard restructuring is outstanding at INR8,800 crores — INR8,600 crores and already restructured accounts at INR4,500 crores slipped to NPA. Total, it is INR13,000 crores are outstanding in our books, the restructuring, sir.
Jay Mundra
Right. And lastly, sir, I think you partly answered on gold loan. So if I remember correctly, last quarter our retail gold was INR28,000 crores, which has increased to INR30,000 crores, right? So that product is still growing in a decent way. Is that the right understanding? Is the number comparable, INR30,000 crore to INR28,000 crores?
K. Satyanarayana Raju
Yes, sir. Actually, it is growing decently because metropolitan cities with a stringent LTV ratio, we created a product available to them instead of giving earlier we used to give for agriculture purposes with the documentary evidence. Now that we have discontinued, we have created without any documentary evidence, if anybody wants to avail a secured personal loan, they can that secured personal loan. So that product has attracted the attention of the many metropolitan borrowers that is giving a continuous almost a 15% growth, sir.
Jay Mundra
Any changes that you have to make to the product in terms of, let us say, disclosure of end-use or maybe rollover — I mean do the customer rollover, they have to necessarily pay the entire outstanding…
K. Satyanarayana Raju
No, no, sir. We are 100% complying the RBI guidelines and no rollovers in these accounts.
Jay Mundra
Yeah. Sure, sir. I’ll come back in the queue.
Operator
We have a next question from the line of Mr. Ashok Ajmera. Mr. Ashok Ajmera, please unmute yourself. We have our next question from the line of…
Ashok Ajmera
I’m here. I’m here.
Operator
Okay, sir, go ahead, please
Ashok Ajmera
Give me some time, because the technology takes some time. Good evening, sir and…
K. Satyanarayana Raju
Good evening, sir.
Ashok Ajmera
[Speech Overlap] good set of numbers as regards the profitability is concerned, sir. Operating profit is good. And in spite of the difficult times, once again, coming in the banking, you have performed well on the profitability front, because you managed it well. Now, sir, my only concern, which is a general concern nowadays in the entire banking sector is the growth in the business. You have answered in your initial remark only, and especially the credit growth. Now, if you look at the current nine months, I think both on deposit front, of course, we are almost half and if you calculate the total FY25 and what is left now in the remaining 2-1/2 – 3 months, then on both the fronts, how do you plan to meet the given targets, sir? Because then, there will be a lot of pressure during this quarter, both on the deposit mobilization side also and the credit side also, and you’ve already consumed a major part of your excess SLR also.
K. Satyanarayana Raju
No, sir. Actually, let me say that even today, our excess SLR cushion is still there, because partly we are even onward lending to the overnight deployment, whatever, because we are getting in excess SLR by 6.5. If the market is paying 20 to 30 basis points extra, we are lending there. That benefit we are taking it. So, if my credit growth is picking, what we have given the guidance is 10%, we are growing at 10.45%. I am sure that the 10.5% we can definitely easily achieve.
So, whatever the given target under the advances growth, 10.45% may not be a big issue for us to meet that requirement. I do not think that because we have enough cushion in the RBI window, we do not have any problem in meeting that requirement. But at the same time, I do not want to cross my CD ratio beyond 78%. That is why we are putting our entire energy again on the liabilities for this entire quarter. We have already given calls to them. And wherever we are addressing the people, we are giving a special thrust on that campaigning mode on the liability side.
Its not that we’re only focusing on CASA, we are even interested in the retail term deposits. So, retail term deposits, actually in the September quarter, there was a muted growth. But in the December quarter, we’ve grown at least INR5,000 crores. And now as on date, we have grown at least INR15,000 absolute numbers in the retail term deposits. We aim to grow in the retail term deposits, as well as the CASA, sir.
So, we will continue to do that. I don’t think it will impact my credit growth, because our given targeted growth is only 10%. We have already achieved 10.5%. And business growth also 10% is achievable, because 8.4% deposit growth if you can focus on that, if you
Cross 9%, we’ll achieve the business growth also, sir.
Ashok Ajmera
Okay, sir, point well taken, sir. Sir, my second question is on our recovery side. So both in the normal recoveries and also the recovery from the written-off account. So what do you think now this quarter going to be? I mean, is it a — because your major thrust, as you said, will be on the deposit side this full quarter, on the recovery front, how do we in this quarter and total FY ’25, both from the normal recovery and the return of account recovery. And having said that after that, on the SRs, like you said that 85% are the SRs and only 15% is the cash recovery and especially in case of NARCL, even if it is government-guaranteed, we don’t take it as an income. So in this quarter, how many such cases have taken place and how much amount of recovery and SRs which we have got cash recovery in SRs.
K. Satyanarayana Raju
Sir, first, let me say that about the recovery of the — recovery steps what we have taken. Of course, NCLT is one aspect, but the SARFAESI is another aspect. Major trust is OTS and DRT also we are pursuing it. So when you focus on DRT, SARFAESI, NCLT, ultimately people will come forward and settle — try to settle the accounts under OTS. So our recovery is more through OTS is more compared to all other things. Even if you see that the existing recoveries plus upgradation total together in the current quarter, the December quarter, we could achieve around INR3,600 crores.
If you say the cash recovery alone, it is INR3,100 crores. Out of INR3,100 crores, we got the benefit of NCLT INR653 crores. The remaining all, we got it through other modes of recovery. And the same tempo, if you have seen that we have shown to the earlier also that in September also, we were — our recoveries are more than the slippages. Whatever our focus we are shifting to the liabilities is not from the recovery side to the liabilities. Recovery sections are separate, recovery teams are separate. We don’t want to mix those teams into that liability side. But the marketing teams, whatever it is there for business growth, there we want to focus — divert them into liability focus, but the retail, the recovery and the slippages, the teams exclusively earmarked for these two parameters will continue to work on that.
And the March quarter also, we expect that the same type of performance whatever we have shown on the December quarter, the slippages, we could reduce it to below INR2,400 crores and the recovery should be more than INR3,000 crores that will continue. We are expecting even INR2,000 crores in the technical written-off accounts. The remaining is in the normal NPA accounts, the cash recovery, sir. And regarding NARCL shifting, the current quarter, we are expecting we may get some INR500 crores to INR600 crores benefit the identified some accounts, but all consortium banks has to come forward and everybody has to give the clearance, then only it happens. But we are also — wherever we identified, we are negotiating with NARCL, in two accounts, we got a positive response. We are hopeful of the two accounts. If we do the two accounts, we may get a benefit of INR500 crores to INR600 crores, sir.
Ashok Ajmera
Sir. So this INR500 crores INR600 crore the outstanding, I mean or the — or the recovery.
K. Satyanarayana Raju
No, sir. It is not the outstanding. It is a recovery what we are expecting. But out of that again, cash recovery will be only 15%, sir. The remaining entire thing will be in the form of SCRs.
Ashok Ajmera
Okay, sir. Sir, last point is on…
Operator
Sir, we have a lot of other participants, sir. Please come in the queue. [Speech Overlap]
Ashok Ajmera
Okay, alright. [Speech Overlap] Thank you and all the best.
K. Satyanarayana Raju
Thank you, sir.
Operator
We have our next question from the line of Mr. Jugal.
Jugal
I hope I’m audible.
K. Satyanarayana Raju
Hi, Jugal ji.
Jugal
Thank you, sir. Thanks for the opportunity. My first question is regarding the bank’s density for advances and just wanted to know how it is trending and the RWA density of our international advances portfolio.
K. Satyanarayana Raju
Yeah. Sir, actually our total global CD ratio is around 76.5%. And we see that the — because CRR is 4% and the SLR requirement as on-date is 18% total together 22%. So we don’t want to cross 78% in a normal condition. Though we have support in the form of own funds and even refinance funds and even infrastructure bonds and all those things, but still in a normal course, we don’t want to cross our CD ratio beyond 78%. With that, the CD ratio, we are at 76.5%. At the present, our growth also projected is only at 10.5% to 11%, we will be well within that 78% for the March end also. The global only I’ve shared with you, domestic maybe a little bit 1% or 2% for — here and there may be happened. That is only for overseas.
Jugal
Sure, sir. And what proportion of our total advances are externally rated? If you could…
K. Satyanarayana Raju
Pardon.
Jugal
What proportion of our total advances…
K. Satyanarayana Raju
Externally A rated, actually we have — see external rating is mandatory in our bank as per our policy, it is INR25 crores and above. So in all those things, 80% of our exposures are A and above.
Jugal
Sure. And sir, if you could just guide on the impact of proposed RBI guidelines on LCR.
K. Satyanarayana Raju
Sir, that the proposed RBI guidelines of LCR is going to come — expected to come effective from 1st April onwards. As on date, our LCR is 123%. And we are assessive that if we implement those things as on today, it may impact our LCR from around 11 to 12 basis points. So our LCR may come down to 110 to 111. But to take care of those things, again, we introduced in the last quarter for rising the deposits at longer tenures, that is two to three years and three to five years buckets we introduced and we offered a higher rate of interest at 7.3% and 7.4. We already garnered more than INR8,000 crores in this and we want to continue to garner in those two buckets at least for next two months so that again we can restore it back my LCR to around 115% to 120%.
Jugal
Sure, sir. Sir, could you help us with the total exposure in HAM projects and also ethanol projects and other biofuel-based projects per se.
K. Satyanarayana Raju
Yes, sir, our exposure to the HAM projects is there around INR25,000 crores to INR26,000 crores. And everything is standard, we are almost financial — we are a part of financial closures of 70 such projects. But there we have some internal policy that generally we take it up A and above rated companies only. But again, we are actively considering monetization of those HAM projects, which have started taking the — receiving the annuities that is also is in the market, that also we are actually participating in that. And ethanol also whatever the — actually it is there, it’s more than INR2,000 crores, it is there. Compressor biogas also we are actually considering that.
Jugal
Sure. Sir, if you could possibly help us with the total exposure to renewable sectors like solar and wind energy per se.
K. Satyanarayana Raju
The exact figures, if it is required that our CRO will share it with you.
Uday Sankar Majumder
See, with regard to renewal, solar and energy, together, our exposure is around INR6,500 crores.
K. Satyanarayana Raju
That is actually outstanding what he is telling you about, but the sanctions are there around INR15,000 crores. These are all project funding, it gradually depending on the progress of the sanction, the progress of the projects only, it will be dispersed. As on date, outstanding sir, INR6,000 crores INR7,000 crores are there, plus INR2,000 crores ethanol is there. So, total INR9,000 crores is there, but the sanctions are there. Total sanctions, if you consider that exposures are more than INR15,000 crores.
Jugal
Yeah, makes sense. Sir, if you could help us with the exposure to Kerala and Telangana Government and specifically the state PSUs, if you could help us out with the same.
K. Satyanarayana Raju
It’s specifically disclosing outside, it may not be correct, but we have — state-wise risk rating is there, state-wise exposure limits are there. These are all the limits will be fixed by the Boards and Board subcommittees. We are well within that sub-limits.
Jugal
Sure, sir. Sir, my last question is on the potential impact of new RBI guidelines on operational risk and interest-rate risk in banking book.
K. Satyanarayana Raju
Our CRO will offer — explain to you, sir.
Uday Sankar Majumder
See, the new guidelines on IRRBB is to be — I mean, date is yet to be announced, but new guidelines has come, RBI is yet to announce it. And as per the guidelines, if the impact of interest-rate change is beyond 15% of my Tier-1 capital, then to that extent, I have to provide additional capital in the Pillar 2 — under Pillar 2. So, as of now with the rough estimate, it is below 15%. So we did not provide any additional capital as far as Pillar 2 is concerned. Yeah. It’s below that, below 15%. So there is no impact. As of now, there is no adverse impact once the new IRRBB guidelines is implemented.
Jugal
Thank you. Sure. Thank you, sir. Thanks a lot.
Operator
Thank you. We have our next question from the line of Mr. Suraj Das.
Suraj Das
Yeah. Hi, Sir. Thanks for the opportunity. Sir, two Questions. First one is, in terms of subsidiary monetization, I mean, what is your plan? And the second one, I think in terms of the subsidiary business overlap, what has been your response and in case the current guidelines have to come in the same shape and form, what would be your action plan?
K. Satyanarayana Raju
Sir, actually the first subsidiary, disinvestment is already we have proposed a disinvestment in two subsidiaries that is one, Canara Robeco Mutual Funds and Canara HSBC Insurance Company. These two cases may already all regulatory required permissions we have obtained. Now, we have communicated to that respective boards to take it forward for that coming out of that public issue. That respective Boards have created sub-Board committees and for close monitoring of this progress.
They are all doing their job and now at this moment, I think bankers have been appointed, so it is under as expected lines and we are expecting that both the companies we maybe — may come for the IPOs in the next financial year. The second one is if the RBI guidelines, as per RBI guidelines, a common activity between the parent company and the subsidiary is only for us Can Fin Homes, but there are no timelines to be stipulated by the regulator. We are watching that market, if at all we feel that we get enough pricing, we expect that our pricing valuation of that company should
Be in the four digit. Whenever we expect that the share price crosses the four digit, we may think of coming out of that.
Suraj Das
Okay, sure, sir.
Operator
Thank you, sir. We have our next question from the line of Mr. Rakesh Kumar.
Rakesh Kumar
Hi, sir, can you hear me, sir?
K. Satyanarayana Raju
Yes. Rakesh Ji.
Rakesh Kumar
Yeah, thanks. Thanks for the opportunity, sir. Sir, just I was a little confused with the numbers that you mentioned in some of the questions that you have changed the asset composition in favor of loans and reduced the cash balances number and that is pretty evident in the number as well. But I am not able to see that the yield on fund has gone up. So that has not happened. Even though there is an increase in the yield on advances. So with the asset composition that could have happened…
K. Satyanarayana Raju
See, let me see that, Sir. Actually, this exercise we have started from December, last December to June. When we are done this rejigging of that low-yielding advances have been we have taken it back. We started doing that high yield which is 8.6 to 8.79, 19 basis points increase is there in that yield on advances. The 19 basis points is not a small amount. That is happened only because of these things. Otherwise, our MCLR there – our RLLR there is no change for the last two years. Then even then, how the yield has increased, that increase in the yield is only because of that, sir.
Rakesh Kumar
Sir, I was referring to the slide information that we have. Anyway, I understood your point. Second thing sir, last quarter we had the LCR of 130%. Now, we have you mentioned 120% or 123%. So, do…[Speech Overlap]
S K Majumdar
So, Rakesh Ji.
K. Satyanarayana Raju
,Just one minute, Rakesh Ji. Our CFO wants to share something to you.
S K Majumdar
Your question is when yield on advances have gone up to that extent, how yields of funds have not gone down — gone up? Isn’t it? That is your question.
K. Satyanarayana Raju
No, no.
Rakesh Kumar
And with the change in asset composition in favor of…[Speech Overlap]
K. Satyanarayana Raju
I told in my [Speech Overlap] that we are rejigged that composition that I answered correctly on. Now tell me, sir, LCR related LCR, know.
Rakesh Kumar
Yes, sir. What I was saying, sir that we have switched — separate some of the…
K. Satyanarayana Raju
See, the LCR earlier 130 to 123, why it has come down? That is your question, sir.
Rakesh Kumar
No, no…
K. Satyanarayana Raju
Generally, LCR will…
Rakesh Kumar
No, no, sir.
K. Satyanarayana Raju
Last quarter we announced that 130.
Rakesh Kumar
Yeah. So that has happened. What I’m — what I’m thinking is that do we plan to further shift cash balances to advances, considering that LCR guideline as you are mentioning might come and we have LCR at around 123%. So, do we have room for that to do it further?
K. Satyanarayana Raju
Sir, as per regulatory requirement, one has to maintain 100%, within that our bank we kept — our Board has kept an internal ceiling of 105. As against requirement of 105, already we are at 123%. So, even if the RBI new guidelines implemented that will impact only 11 to 12 basis points, which may come down to 110 to 111. But we do not want to be — play or this business at such a smaller gap. That’s why we have already taken initiatives to garner the more deposits in the longer tenure buckets that is two to three years and three to five years, which we are offering the higher rate of interest and we already started garnering the deposits. We garnered more than INR8,000 crores
In the last one month.
Rakesh Kumar
Last question, sir, is there any classification issue in the commission exchange brokerage income line?
K. Satyanarayana Raju
No, Sir. There is no such a miscellaneous income. You are aware that last year RBI guidelines have come that penal interest should not be charged in the interest side. It has to be booked in that other charges. So, that’s the accounting standards have been changed compared to last year to this year. So, to that extent, interest income has come down and to that extent the miscellaneous receipts have increased. Except that remaining things are only because of the business growth, nothing else that comes approximately INR150 crores or INR160 crores.
Rakesh Kumar
Okay. Thank you. Thank you so much, sir.
K. Satyanarayana Raju
Thank you, sir.
Operator
Thank you, sir. We have a next question from the line of Ms. Mahrukh. Ms. Mahrukh, you can unmute yourself. We have our next question from the line of Mr. Sushil Choksey.
Sushil Choksey
Good evening and congratulations. Yeah, Mahrukh go ahead.
K. Satyanarayana Raju
Thank you, Choksey, sir.
Sushil Choksey
Sir, congratulation to Team Canara for very stable and positive result. Sir, you just highlighted that you are open to monetizing Can Fin Homes. Now, if you are looking for a strategic premium because you are saying that you are looking for INR1,000 price with the current market condition which is in a little correction or a consolidation mode, whether it’s a housing finance sector or overall financial market. Are you open for any strategic buyback?
K. Satyanarayana Raju
No Sir. Actually, because the RBI has given a guideline on the subsidiaries that a common activity should not be there, but there are no — for existing organization, there are no timelines for closing down those things. So, since it is opened for the individual banks to take a call on that for us, we know the internal strength of that company. We have 29.9% shareholding in that company. We feel that we have initiated something with the help of that Board and that current top management. Some initiatives we have done in cleaning at the top level as well as in their functioning that will start yielding the results in one or two years. We want to wait for that one or two years when results are coming out the real value will come out. When the real value comes out, then we may think about that this, whether it has to
Be strategic sale or whatever it may be.
Sushil Choksey
Sir, but if somebody is working with a positive approach that you’ve done the cleansing, the value is already there at INR1,000 or INR1,200 or 1,100, whatever may be the fair value. And because we are offering 30%, which enables him to make an open offer too. So he can increase his stake from the market and the market would tender the shares. In such scenario, will we participate or we’ll wait for one or two years only?
K. Satyanarayana Raju
Sir, it is actually as an individual, these decisions cannot be taken as at this level, but it generally these options will be discussed in our strategy meet generally happens once in a year at a Board level, and this year also it will be scheduled either in March or in the April. During that board meeting, it will be discussed thoroughly threadbare. Then as per the Board directions, we will proceed and we will share it with you, sir.
Sushil Choksey
Thank you for answering that question. Sir, next is on non-interest income. There has been very good performance where treasury was concerned and return of accounts are concerned. How do you see that panning out in the current quarter?
K. Satyanarayana Raju
Sir, the non-interest — the treasury — actually whatever the benefit, we got it as a part of that 5% sale of HTM Securities that benefit we have taken because all other banks have taken earlier, we had not taken, we had kept it pending and now this December quarter also we have not taken entire 5%, we have not sold it, part of that only we sold it. The remaining balance we can sell it in this quarter. That benefit always will be there that we will take the benefit out of whatever is the benefit is there. Second, recovery and technical written of accounts will continue. We are expecting this quarter also will be there around INR2,000 to INR2,100.
Sushil Choksey
So what is the number outstanding on written-off accounts?
K. Satyanarayana Raju
We have around INR68,000 crores, sir.
Sushil Choksey
Okay. Sir, if the yield on G-Sec is in the region of 6.5% to 6.7%, the profit can match of the previous quarters or…
K. Satyanarayana Raju
We’ll wait-and-watch, sir. Let us see that what will happen.
Sushil Choksey
And do you anticipate to monetize your subsidiaries, which you are already looking towards Canara-Robeco in this quarter or you think it will go into the next quarter?
K. Satyanarayana Raju
No, sir, not in this quarter, sir. That will be in the next financial year. Because already, the merchant bankers have been appointed. Now it is in their hands. Once they say that we are ready, then we will think about it.
Sushil Choksey
Okay. Sir, I know you answered the majority of the participants’ question on CASA. If we move well on CASA, I think we’ll outsmart majority of the competitive banks. So, what acceleration program other than what you’ve garnered in deposits, new schemes can be done from the geography where we are present because it’s a difficult geography where CASA is concerned because people generally don’t keep idle balances because they are smarter humans. What can we do differently that will help us to grow a better way?
K. Satyanarayana Raju
Sir, nowadays every year we want to open some 250 to 300 new branches. These new branches we are planning to open where the CASA of potential is there especially where our presence is little comparatively lower and that’s why the work compared to the South India, we are opening more in the North and Eastern side that branches and last year we opened 211 branches. This year already we opened 180 branches and we are targeted for 250 branches. This will continue for 2 – 3 years and these 1,000 branches, if you once open, definitely create a mark in that, that the strategy anyhow it is continuing that sir
Sushil Choksey
Thank you, sir. Thank you for answering all my questions and best wishes to Canara Bank team for the years to come.
K. Satyanarayana Raju
Thank you, sir. Thank you. Thank you so much.
Operator
Thank you, sir. We have a next question from the line of Mr. Arvind Dara[phonetic].
Arvind Dara
Hi, sir. Thank you so much for the opportunity.
K. Satyanarayana Raju
Hi, Arvind.
Arvind Dara
Hello Sir. You mentioned about, you know, maintaining CD ratio below 78%. If the deposit environment continues to be constrained, of course we may continue to remain on you know CD ratio maintaining CD ratio below 78% or would be flexible in that aspect. That is my first question. And the second question is on expenses. This year we have been able to like manage expenses you know much below — in much more controlled manner, can we expect you know expenses to be like in line or closer to income growth next year, sir? These are two questions.
K. Satyanarayana Raju
Sir, first, let me say that liability, sir, liability for us also, earlier also I shared something against that. It is not that CASA we are finding it difficult to garner the more CASA, but liabilities we are not finding difficult to garner it. Only thing you have to shut higher rate of interest which we are cost consciousness, that’s why whatever it is required we are garnering that liabilities. When we have decided that our CD ratio is 78%, there afterwards our incremental deposit and advances we will ensure that we will match these two things by if at all if necessary, we may have to increase the deposit rate. That’s All.
Otherwise, see it is not difficult for us to garner the deposit only thing we want to be cost conscious. We don’t want to shut the higher rate of interest. That’s why when you have surplus cushion in your system, we want to take maximum benefit out of it. Once that is, if it is coming to the exhaust it, then we may go ahead with that offering a higher rate of interest and garner the deposit, but at this movement, I don’t see any such issue. The second one is expenses. I don’t see any further increase in the expenses suddenly, but the — annually suppose 6% to 7% annual growth in the expenses is likely to happen, but that’s only to that extent, I’m expecting that, otherwise we will continue that’s see the cost-to-income ratio around 47% – 48%.
Arvind Dara
Sure, sir and just one more question from my side. SARFAESI, especially in the system level, the unsecured loans you know personal loans, you know credit cards and these are the segments where you know multiple companies have faced issues because of the higher growth you know like you know when people say like over-leveraging you know with the particular part set of borrowers that led to issues that we can see in different companies. Like I have similar question for MSME sir, like in the MSME, in the system as well as what the bank has grown in a commensurate rate in the past few years, do you see any signs of, you know over-leveraging or any issues there which could be propping up there?
K. Satyanarayana Raju
No, Sir. I don’t see any such leverage in MSME. Last two years back, we have revisited underwriting standards of all our MSME products and we have centralized the processing of those accounts. We created each regional office, 177 regional offices. We created a hub for processing the MSME loans. That has started giving the results. That’s why slippages are under control. That’s why gradually our NPA
And our MSME is coming down. I don’t see any that too much stress on that except one or two small government sponsor schemes or anywhere the stress is there, but that is well within our risk appetite only. I don’t see anything on that.
Arvind Dara
And just one last thing if I can sir…
K. Satyanarayana Raju
We don’t lend too aggressively anywhere and we are not active in portfolio — buyout of any portfolio. Our total portfolio buyout outstanding is only entire bank, all including retail, MSME, everything together is only INR1,600 crores. Our exposure to MFI is only INR300 crores. So our even co-lending is also less than INR1,000 crores. So, we are not too aggressive on that lending. Instead of that, we are actually making — involve our branches to generate the loans and that this year we are expecting that we will touch the 10% — that’s a double-digit growth in the MSME. Last year, we were at 7%, 7.5%. This year, we are confident that we may touch 10%.
Arvind Dara
Sure, sir. Thank you for the elaborate explanation. Just one last thing if I can squeeze in. With respect to recoveries from technically written-off accounts, can we say expect similar run-rate for next two years also?
K. Satyanarayana Raju
Yes, this current quarter also, I already repeated — reiterated earlier whatever the last quarter we got around INR2,000 crores, this quarter also we are expecting that the INR2,000 crores will be recovered.
Arvind Dara
Sure, sir. Thank you.
Operator
Thank you. We have a last question from the line of Mr. Akhilesh.
Akhilesh
Hi, team. Good evening. Sir a couple of questions from my side. Firstly, I’m sorry if this is a repeat question because I got disconnected in between. Firstly, if I look at the SMA 2 book, you had called out two accounts — two state government accounts in the last quarter in the SMA 2 book. One more is the Andhra based PSU in the steel sector and the other one was a state government account. What is the update on those accounts as of now?
K. Satyanarayana Raju
Now, as on date as on December 31st, these two are appearing in the SMA 2, but as on date these two has come out of even SMA. These are all now not even in the SMA 0.
Akhilesh
Even the steel account?
K. Satyanarayana Raju
Yes sir, both, Steel Authority and Telangana, whatever it is there.
Akhilesh
Okay, got it. Sir. And secondly, the last participant was also checking about the outlook on recoveries for the next two years. Is there some sense that you have in terms of trend?
K. Satyanarayana Raju
See, a two-year is too long period to predict, but I can tell that the present Canara Bank side, I can tell that I cannot comment on the industry-wise because we are conscious, we are little conservative in a high-risk portfolios. Next to one year and one and a half year, whatever it is there, I’m sure that our slippages will be less than our recovery and upgradation.
Akhilesh
Got it. Sir, and just lastly, if I look at the trend on other interest income that has been trending downward, you expect the same…
K. Satyanarayana Raju
It has reached to the bottom, sir. Further down, we don’t expect in this.
Akhilesh
Okay, sir, just one last question if I can squeeze in. The other opex seems to be a bit volatile in the last few quarters. What is the cause for this?
K. Satyanarayana Raju
No, sir. Actually you may be remembering that last continuously three years, we are investing heavily on the IT. So, when we are investing, though it is a capex next year onwards, it will convert into an ATS and all the service charges and all you have to pay it. So that’s the only thing except that nothing is there, sir. And we are also opening new branches, you can accept it last year ondwards previous yearly we were not opening. Last year, we opened 211 branches. This year also we are opening 250 branches. That also will add to our opex to some extent. When you want to grow in your CASA, you have to bear with that to possible extent.
Akhilesh
Okay, sir. Thank you for answering my questions.
K. Satyanarayana Raju
Okay. Thank you, sir.
Operator
[Indecipherable] Canara Bank. Thank you, sir. We will take that as the last question, over…
K. Satyanarayana Raju
Thank you, sir.
Operator
For your closing remarks.
K. Satyanarayana Raju
Thank you. Thank you, one and all. We will continue to perform consistently. That’s what actually we always share even at the beginning of the year. And even today, after three completed quarters, we have proved that we are consistent in our performance in all the key parameters. Thank you, sir. Thank you one and all.
Operator
Thank you, everyone. That concludes the call.